With headlines from the media/tech landscape flooding your inboxes daily, the VIP+ team is here to distill the biggest of them and make a case for why it matters. Below, each of our incisive analysts has picked one development that heated up their week.
Andrew Wallenstein, Chief Media Analyst
Media buying giant GroupM issued revised projections for the advertising business for 2021 and beyond earlier this week because of how strongly the U.S. economy is bouncing back from a COVID-induced slowdown. Ad spend for the year is now projected to be nearly 15% higher than in 2019, more than making up for the 5.6% ad spend dropped in 2020.
It shouldn’t come as any surprise that digital dollars are growing faster than anything else in advertising. Q1 earnings for the top tech companies were a clear indication that surge was coming. But just because digital is growing strong, doesn’t mean there’s a tougher story to tell in TV. Despite the fact that TV ratings are reeling in the second quarter, the upfront marketplace is holding up just fine.
Linear TV is seeing healthy demand regardless of double-digit declines among total viewers in the second quarter, per MoffettNathanson. And the same companies that have always ruled traditional TV are seeing an acceleration of advertiser interest in the connected-TV marketplace, where streaming extensions from Peacock to HBO Max are thriving alongside tech players including Roku and YouTube.
When it comes to premium video right now, it’s almost as if everyone’s a winner amid the streaming boom. But that can’t last forever.
Kaare Eriksen, Information Editor
Roblox Corp., which owns and operates the popular online gaming platform and game-creation system comprising its namesake, has now found itself in front of similar crosshairs that were aimed at Twitch in 2020.
The National Music Publishers’ Association filed a lawsuit of at least $200 million against Roblox, claiming widespread unauthorized use of songs across the platform without payment to songwriters or copyright holders. Roblox has put its foot down in defense, saying the NMPA doesn’t fully understand how its platform operates and that there are already music filtering systems in place, as well as clearly stated community guidelines that are enforced.
Popular online platforms within the gaming space have presented golden opportunities for cross-sector collaboration throughout the pandemic. In response to the NMPA, Roblox pointed to its own virtual concerts with such artists as Lil Nas X as evidence it takes its relationship with the music industry seriously.
Unlike Twitch, which elected to remove archived stream videos that resulted in DMCA takedowns en masse while advising frustrated users to start policing their own streams in order to prevent unlicensed music from being played, Roblox appears willing to stand its ground for now. But it goes to show there are some serious monetary hurdles for online gaming platforms to overcome as they continue to double as spaces where other forms of media can flourish.
Kevin Tran, Media Analyst
Facebook’s upcoming smartwatch will feature two cameras capable of capturing content that can be share across platforms including Instagram, The Verge reported earlier this week. The watch, which has not been confirmed by Facebook, was reported by The Information to be in development in February, but details on its cameras are new.
A Facebook smartwatch may be a tough sell for many. Aside from some consumers fearing how their data might be handled by a Facebook watch, there’s probably many current Facebook and Instagram users out there who see little utility in being able to post content captured from their watches to social platforms.
The company is surely wondering how many consumers would pay for its smartwatch, but it won’t necessarily abandon a hardware push just because the venture is not quickly paying off.
Facebook purchased Oculus for about $2 billion in 2014, and the VR company’s first commercial product, Oculus Rift, didn’t go on sale until March 2016. It also cut the price of Rift in January and July 2017, indicating it wasn’t satisfied with how sales were going early on. Fast-forward to the first quarter of this year, and Facebook generated $732 million in non-ad revenue, with the majority of that attributable to Oculus sales.
Hardware helps generate another revenue stream beyond advertising for Facebook. But the move is also meant to eventually help the company get to a place where it’s much less reliant on tech companies like Apple or Google to reach users, and getting to that place will take time.
Gavin Bridge, Senior Media Analyst
NBCU’s streaming service Peacock finally was available on Samsung smart TVs this week, as the service belatedly took a big step toward full distribution across connected TVs and devices. In truth, it has always been baffling that Peacock launched last July without deals with the three most used platforms in the U.S. — Roku, Samsung and Fire TV — and that almost a year later it was still without deals for Samsung and Amazon’s Fire TV devices.
Given that other services launched in that time — most recently Discovery+ and the rebrand of Paramount+ — and began on day one with coverage across all devices, the slowness from Peacock is even more puzzling.
One possibility is that as COVID-19 delayed production on shows slated for the first year of the service and, more importantly, saw the Olympics postponed, Peacock’s management simply took their time about putting deals in place.
With the Olympics taking place next month, a distribution deal with Fire TV seems likely. Hopefully that will see Peacock’s free users and paid subscribers grow, to the point that NBCU is confident enough to give deeper user stats for Peacock in its quarterly earnings calls than “people who have ever signed up.”
Heidi Chung, Media Analyst/Correspondent
Netflix is moving into retail. The streaming giant officially launched an online retail shop selling exclusive merchandise from its most beloved shows and movies.
It makes sense and is a pretty smart way for the company to tap into a fresh revenue stream. As we already know, it works wonders for rival Disney — and let’s be honest, Netflix needs all the help it can get to boost that top line, as competition in streaming is as fierce as ever.
Netflix had a rough first quarter. Revenue did grow a solid 24% from last year, but the closely watched subscriber figure was well below expectations. The company plans to continue spending heavily on content — $17 billion, to be exact. Retail is a tough business, but it might be a necessary one for Netflix even if it’s only of incremental value.
The main issue is whether fans of Netflix originals are as loyal as Disney franchise fans. The merchandise game is only as good as the fan base, and this new venture for Netflix will be a true test of loyalty.